A housing development in County Longford sits unfinishedPhotocall Ireland

December saw a fall in construction activity for the 31st month in a row. According to the Ulster Bank Construction Purchasing Managers' Index, the building sector showed its steepest decline in seven months.

The index dropped to 33.1 in December from 34.2 in November, its lowest level since May, and below the no change level of 50.

The index reveals that new business and employment also fell at faster rates in December. For the second month in a row, firms forecast that activity would be lower in 12 months' time than current levels.

The index also suggests that new work was insufficient to compensate for the completion of existing projects.

Ulster Bank says that rates of decline accelerated across all three monitored categories last month -- housing, commercial and civil engineering. The steepest reduction was in the commercial sector, with activity falling to 32.3 from 33.2 in November.

The weakest fall was in civil engineering projects, although the decrease here was still substantial. Housing activity fell to 32.6 from 35.1

“The December reading of the Ulster Bank Construction PMI reveals a very weak end to what was an exceptionally challenging year for the Irish construction sector,” commented Simon Barry, chief economist at Ulster Bank.

“At 33.1 the index remains considerably below its no-change benchmark level of 50 and continues to point to a sector that is contracting deeply. While a pick up in international economic conditions is beginning to benefit the Irish manufacturing and service sectors, the same is clearly not true for the domestically-focused construction industry,” he adds.